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Fair Lending Report of
the Consumer Financial
Protection Bureau
DECEMBER 2012
2 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
Message from Richard Cordray
Director of the CFPB
On July 21, 2011, the Consumer Financial Protection Bureau was launched as the first government
agency solely dedicated to consumer financial protection. This report on Fair Lending describes the
Bureau’s efforts to build and implement our fair lending program.
As the past few years have shown, financial products have the potential to wreak havoc on
consumers and the wider economy. Far too often, unequal access to responsible credit can be at the
root of these trends and problems. When a potential homeowner cannot get a home mortgage or a
small business owner cannot obtain a loan for capital improvements, because of the neighborhood
where the home or business is located, both the consumer and the community they belong to suffer.
The belief that each of us can better our lot in life – that our children’s future will be brighter than
our own – is deeply ingrained in the fabric of this country. Essential to that belief is the premise that
each of us can access equality of opportunity, and that it is not limited only to a certain privileged
set of Americans who are especially blessed by fortune or background. Too often, that equality of
opportunity is harder to find than any of us would like or want to believe.
The CFPB is committed to making fair, equitable, and nondiscriminatory access to credit for both
individuals and communities a reality. Through the leadership of the Office of Fair Lending and
Equal Opportunity and the collaboration of various divisions and offices across the Bureau, we
strive to make the financial markets work for consumers, honest businesses, and the economy as a
whole. We will work to educate consumers about their fair lending rights, and we will warn them
3 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
about the costs and risks associated with financial products and services while working to improve
the practices of financial institutions.
Dr. Martin Luther King, Jr. once said, “Our lives begin to end the day we become silent about things
that matter.” The Consumer Financial Protection Bureau is still in its infancy, but we are here today
to say plainly that we will not be silent about discriminatory lending practices. Illegal discrimination
in all of its forms is wrong, and it violates the fundamental American precept that each individual
should have access to equality of opportunity. Our twin goals are to protect consumers and
empower them to be able to protect themselves.
We are intent on making the financial markets work better for the people we serve. Consumers
deserve to have someone who stands on their side and sees to it that they are treated fairly and
equally in the financial marketplace.
Sincerely,
Richard Cordray
4 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
Message from Patrice Alexander Ficklin
Assistant Director for Fair Lending and Equal Opportunity
In mid-May 2011, I took my oath to serve as Assistant Director and lead the Office of Fair Lending
and Equal Opportunity at the Consumer Financial Protection Bureau. Since that day, the Office of
Fair Lending and Equal Opportunity has been hard at work to ensure that all consumers, regardless
of protected status, have fair and equal access to credit. I am honored to serve as Assistant Director
for Fair Lending and Equal Opportunity and to share with you a progress report on the Bureau’s
efforts in this important area, which is at the intersection of consumer financial protection and civil
rights.
Having served as counsel to financial services providers and to civil rights and advocacy groups, my
role as Assistant Director for Fair Lending at the Bureau is deeply informed by these varied
perspectives. Because of my experience, I came to the Bureau well aware of the deep commitment to
fair lending that is shared by a broad constituency of consumer advocates, civil rights groups, and
many in industry as well. These experiences have also led me to embrace this opportunity as one
that will allow a fresh look at ways that a federal agency with fair lending supervisory, enforcement,
and rulemaking responsibilities can ensure compliance with the federal fair lending laws, while also
promoting access to responsible credit for underserved markets and consumers.
I have the honor of leading a team with diverse expertise and perspectives. These experiences
translate into innovative thinking and approaches to questions related to equal access to credit and
fair lending that thousands of consumers face every day. In addition to our supervisory,
5 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
enforcement, and rulemaking activities, our outreach efforts have deployed CFPB team members
across the country, to work with industry and advocacy groups on the promotion of fair lending
compliance and education. Our work is informed by these collaborative partnerships and ongoing
dialogue, and we remain committed to these efforts as a means to consistently review and reassess
our perspectives on the consumer financial marketplace and access to credit.
The Bureau’s fair lending mission is not pursued in a vacuum. We will continue to collaborate with
federal and state partners to achieve efficient and effective outcomes for the benefit of consumers.
The Bureau is also an active participant in several interagency fair lending efforts, and works closely
with the various federal agencies charged with fair lending supervisory and enforcement
responsibilities. As you will see in this Report, the Bureau now has responsibility for preparing the
comprehensive fair lending reports to Congress that are prescribed by the Equal Credit Opportunity
Act and the Home Mortgage Disclosure Act. These reports are the result of coordination and
collaboration with other federal partners.
As a 21st century agency, the Bureau communicates with consumers in varied ways – through
traditional means, including “Outside the Beltway” field hearings that are open to the public, and
also through the latest technologies. I have been enriched by the opportunity to interact with
consumers, and I look forward to continued dialogue. We want to hear from consumers about their
personal consumer finance stories, and we also want to ensure that they have the latest and best
information available to make informed decisions about the financial products that are best suited
for their family’s needs.
I encourage you to visit our website, consumerfinance.gov, where consumers can learn about the
next field hearing; understand their fair lending rights; ask the CFPB a question; tell their consumer
finance story through the “Tell Your Story” function; or read a blog entry about a current trend in
the consumer finance marketplace. Consumers can also follow the Bureau via our Twitter feed and
tweet their voice on consumer financial issues to us.
I am proud to present the Bureau’s first Report on Fair Lending.
Sincerely,
Patrice Alexander Ficklin
6 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
Table of Contents
Message from Richard Cordray ................................................................... 2
Message from Patrice Alexander Ficklin ..................................................... 4
Executive Summary ...................................................................................... 8
Fair Lending Mandate .................................................................................8
First Year Accomplishments ………………….………………………………………..10
Next Steps ................................................................................................. 11
1. Building and Implementing the CFPB’s Fair Lending Program ........ 12
1.1 Building the Office of Fair Lending and Equal Opportunity ........... 13
2. First Year Accomplishments ................................................................ 14
2.1 Using Fair Lending Supervisory Oversight and Enforcement to
Identify and Eliminate Consumer Harm ......................................... 14
2.2 Fair Lending Enforcement Activity .................................................. 16
2.3 Fair Lending Consumer Education and Engagement ...................... 17
2.4 A Data-Driven Approach to Fair Lending – Collaboration with
Research, Markets, and Regulations ............................................... 19
2.5 Dodd-Frank Act Report to Congress on Private Student Loans .... 20
2.6 Amending Fair Lending Regulations ............................................... 25
7 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
3. Reporting on the Equal Credit Opportunity Act and the Home
Mortgage Disclosure Act ..................................................................... 27
3.1 Reporting on the Equal Credit Opportunity Act .............................. 27
3.2 Reporting on the Home Mortgage Disclosure Act ........................... 32
4. CFPB Outreach: Working with Private Industry, Fair Lending, Civil
Rights, Consumer and Community Advocates .................................. 34
4.1 Private Industry Outreach ................................................................ 34
4.2 Outreach to Fair Lending, Civil Rights, Consumer and Community
Advocates.......................................................................................... 35
5. Fair Lending Look Ahead ..................................................................... 38
8 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
Executive Summary
Endowed by Congress with a unique consumer financial protection mission, the Consumer
Financial Protection Bureau (CFPB) brings a new focus to questions of fair lending and equal access
to credit in the consumer finance marketplace.
In this inaugural Report on Fair Lending, the CFPB provides a comprehensive overview of our fair
lending program and describes our work in this area from July 21, 2011 through July 20, 2012.
Additionally, this Report fulfills congressional reporting requirements under the Dodd-Frank Wall
Street Reform and Consumer Protection Act (Dodd-Frank Act) (§ 1013(c)(2)(D) of Public Law 111-
203), the Equal Credit Opportunity Act (ECOA) (15 U.S.C. § 1691f),1
and the Home Mortgage
Disclosure Act (HMDA) (12 U.S.C. § 2807).
Fair Lending Mandate
The Dodd-Frank Act vests the CFPB with specified supervisory, enforcement, and rulemaking
authority with respect to a number of federal consumer financial laws, including ECOA and HMDA.
ECOA has broad coverage, prohibiting discrimination in mortgage lending and a wide array of other
types of lending, including auto finance, credit cards, business loans, and unsecured loans. HMDA
requires that specified mortgage lenders annually collect and report mortgage lending data in order
to determine whether institutions are serving the housing needs of their communities, to aid in
targeting public investment, and to identify possible discriminatory lending patterns and enforce
fair lending laws.
1 The ECOA Report covers the period from July 21, 2011 through December 31, 2011.
9 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
In addition to responsibilities for ECOA and HMDA, Congress also charged the CFPB with
addressing a number of fair lending-related areas of interest, set forth in the Dodd-Frank Act. These
include:
Establishment of the Office of Fair Lending and Equal Opportunity. Congress
required the creation of the Office of Fair Lending and Equal Opportunity within the
CFPB, and charged the office with ensuring that the CFPB provides “oversight and
enforcement of Federal laws intended to ensure the fair, equitable, and
nondiscriminatory access to credit for both individuals and communities that are
enforced by the CFPB, including the Equal Credit Opportunity Act and the Home
Mortgage Disclosure Act.” (Dodd-Frank Act § 1013(c)).
Rulemaking. Congress mandated new rules under:
o ECOA – to “facilitate enforcement of fair lending laws and enable communities,
governmental entities, and creditors to identify business and community
development needs and opportunities of women-owned, minority-owned, and
small businesses” (Dodd-Frank Act § 1071);
o HMDA – to require mortgage lenders to collect and report additional data fields
(Dodd-Frank Act § 1094); and
o The Truth in Lending Act (TILA) (15 U.S.C. § 1602) – to “prohibit . . . abusive or
unfair lending practices that promote disparities among consumers of equal
credit worthiness but of different race, ethnicity, gender, or age” (Dodd-Frank Act
§ 1403).
Reports to Congress. Congress mandated CFPB reports on topics that raise fair
lending-related issues, including remittances, credit scoring, and reverse mortgages.
In addition, Congress directed the CFPB to “examine, at a minimum . . . the
underwriting criteria used by private education lenders, including the use of cohort
default rate” and to examine whether federal regulators and the public have access to
sufficient information to “determine lender compliance with fair lending laws” (Dodd-
Frank Act § 1077). Finally, the Dodd-Frank Act transferred to the CFPB annual
reporting responsibilities set forth in ECOA and HMDA.
10 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
First Year Accomplishments
The Office of Fair Lending and Equal Opportunity, in conjunction with other CFPB offices, has
spent considerable time during the CFPB’s first year addressing the priorities established in our
mandate, and expects that some will remain priorities in the months and years to come. In addition
to our Congressional directives, we have identified a number of other important areas to be
addressed as the CFPB executes its fair lending mission. This includes ensuring the appropriate
breadth of the CFPB’s fair lending supervision and enforcement activities, and specifically
addressing compliance by a range of financial services providers – including both banks and
nonbanks – that offer a variety of loan products such as home mortgages, auto loans, student loans,
credit cards, and small-business loans.
Our first-year accomplishments include:
Establishment of the Office of Fair Lending and Equal Opportunity, and the
recruitment of a diverse and highly-qualified fair lending team;
Commencement of the CFPB’s fair lending supervision program, and completion of
various levels of fair lending reviews at dozens of bank and nonbank institutions
offering a variety of lending products;
Commencement of the CFPB’s fair lending enforcement program, and initiation of
fair lending investigations;
Ongoing work on amendments to the regulation that implements HMDA, and
planning for the amendments to regulations that implement ECOA and TILA;
Completion of an empirical study and report to Congress on the use of cohort default
rates in private education lending;
Ongoing collaboration and coordination with federal and state partners; and
Outreach to private industry as well as fair lending, civil rights, and consumer and
community advocates through dozens of meetings and events in Washington, DC and
across the country.
11 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
Next Steps
The CFPB is committed to ensuring that all consumers and communities have fair and equal access
to credit. We are still in the process of building our fair lending program and expect the CFPB’s
contribution to the work of ensuring compliance with fair lending laws and promoting access to
credit will grow as our program progresses. We are also developing risk-based approaches to our
fair lending supervision and enforcement work to efficiently allocate the CFPB’s resources in a
manner that provides the greatest benefit to consumers. As the CFPB and the Office of Fair Lending
and Equal Opportunity mature, we pledge to continue to promote fair, equal, and
nondiscriminatory access to credit and fair lending for all consumers and communities.
12 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
1. Building and Implementing the CFPB’s Fair Lending Program
The Office of Fair Lending and Equal Opportunity plays a leading role in the CFPB’s efforts to
ensure fair, equitable, and nondiscriminatory access to credit for both individuals and communities.
Our vision is a consumer finance marketplace where individuals and communities have fair and
equal access to financial products and services, product pricing reflects risk and value, and terms
and conditions are clear and nondiscriminatory. Because our mission intersects with that of many
other offices within the CFPB, we are involved with initiatives in many areas of the CFPB’s work.
Congress created the Office of Fair Lending and Equal Opportunity2 in the Dodd-Frank Act.
3 The
Office of Fair Lending is located within the Division of Supervision, Enforcement, and Fair Lending,
which is headed by Associate Director Steven Antonakes. Within the Division, the Office of Fair
Lending works closely with our supervision and enforcement counterparts to ensure that financial
institutions supervised by the CFPB comply with federal fair lending laws and regulations over
which the CFPB has jurisdiction. We provide guidance and support to large bank and nonbank
examination teams to ensure that financial institutions’ fair lending policies and practices are
thoroughly examined and that concerns or violations are identified and addressed. We are also
active in the CFPB’s enforcement process and, together with our enforcement colleagues, lead the
CFPB’s fair lending enforcement program and priorities.
2 Hereinafter referred to as the Office of Fair Lending.
3 Pub. L. No. 111-203, tit. X, § 1013(c)(1), 124 Stat. 1376, 1970 (2010) (codified at 12 U.S.C. § 5493(c)(1)).
13 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
1.1 Building the Office of Fair Lending and Equal Opportunity
To implement the CFPB’s vision for the consumer financial marketplace, Assistant Director Patrice
Alexander Ficklin has assembled a diverse and highly-qualified fair lending team consisting of
attorneys, law clerks, risk analysts, operations analysts, and administrative specialists. The team
brings to the CFPB a vast array of expertise and experience, from the federal prudential regulators,
the United States Department of Justice (DOJ), the United States Department of Housing and
Urban Development (HUD), the Federal Trade Commission (FTC), state attorneys general offices, a
local human relations commission, civil rights organizations, and financial services providers. This
diverse group is unified by one common goal – a commitment to promoting fair lending and equal
access to credit.
Access to credit is the ticket to a middle-class lifestyle, which typically requires loans to go
to college, make everyday consumer purchases, buy a car, own a home, or to cope with
temporary financial difficulties. Those who work to promote equal access to credit –
whether in government, private practice, or within regulated institutions themselves – are
truly advancing the current civil rights cause.
Counsel, Office of Fair Lending and Equal Opportunity
14 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
2. First Year Accomplishments
The CFPB has many tools across several divisions – including the Division of Supervision,
Enforcement, and Fair Lending; the Division of Research, Markets, and Regulations; and the
Division of Consumer Education and Engagement – to fulfill its fair lending mission. Through close
collaboration with CFPB partners, the Office of Fair Lending uses all the tools at its disposal,
including supervision, enforcement, consumer education and engagement, the study of consumer
financial markets, empirical research and analysis, and rulemaking to ensure that the CFPB’s
mission of promoting fair and equal access to credit is a reality for consumers and communities
alike.
2.1 Using Fair Lending Supervisory Oversight and Enforcement to Identify and Eliminate Consumer Harm
On October 13, 2011, the CFPB released its Supervision and Examination Manual, which was the
culmination of months of work by many offices within the CFPB, including the Office of Fair
Lending. The Manual is a guide to how the CFPB will supervise and examine consumer financial
services institutions under its jurisdiction for compliance with the Federal consumer financial laws.
The Manual contains supervisory guidance on ECOA and HMDA. On April 18, 2012, the CFPB
15 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
issued a Compliance Bulletin on Fair Lending that addressed lending discrimination.4 The Bulletin
stated that “[c]onsistent with other federal supervisory and law enforcement agencies, the CFPB
reaffirms that the legal doctrine of disparate impact remains applicable as the Bureau exercises its
supervision and enforcement authority to enforce compliance with the ECOA and Regulation B.”5
The CFPB’s supervision program assesses large bank and nonbank compliance with Federal
consumer financial laws and regulations. CFPB-supervised entities include banks, thrifts, and credit
unions with assets over $10 billion, and their affiliates and service providers, as well as nonbank
financial services providers such as mortgage lenders and brokers, payday lenders, private
education lenders, and their service providers. In the CFPB’s supervision of large banks and
nonbank financial entities, we are committed to conducting examinations that focus on risk to
consumers and place the highest importance on identifying any violations of Federal consumer
financial laws and eliminating any resulting harm to consumers. We also expect that regulated
entities under the CFPB’s jurisdiction will have effective compliance management systems,
including effective fair lending compliance management systems, which are adapted to the
institution’s business strategy and operation.
Thus far in fiscal year 2012, the Office of Fair Lending has supported CFPB examiners in activities at
dozens of institutions – both bank and nonbank. These activities ranged from assessments of the
institutions’ fair lending compliance management systems to in-depth reviews of products or
activities that may pose heightened fair lending risks to consumers.
The Office of Fair Lending has led efforts to train CFPB examiners on the federal fair lending laws,
and developed procedures to assist these examiners in the identification of potential fair lending
violations. As part of the CFPB’s new employee orientation program, every examiner joining the
CFPB receives fair lending training, which was developed and is conducted by the Office of Fair
Lending. In addition, attorneys from the Office of Fair Lending periodically brief regional
examination teams on fair lending topics and provide updates on fair lending trends and issues
observed through examinations. In June 2012, the CFPB launched its Fair Lending Examination
4 CFPB Bulletin 2012-04 (Fair Lending) (Apr. 18, 2012), available at
http://files.consumerfinance.gov/f/201404_cfpb_bulletin_lending_discrimination.pdf.
5 CFPB Bulletin, supra note 4, at 1.
16 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
Techniques training program, a two-week course that was developed through close collaboration
among the Offices of Fair Lending, Large Bank and Nonbank Supervision, and others. The course is
designed to provide additional in-depth training to CFPB examiners and is a prerequisite to the
CFPB’s examiner commissioning process.
Assistant Director Patrice Alexander Ficklin, CFPB Deputy Director Raj Date, and Nonbank Supervision
Assistant Director Peggy Twohig participate in a field hearing on payday lending in Birmingham, AL.
2.2 Fair Lending Enforcement Activity
The CFPB has many tools available to promote fair and nondiscriminatory treatment of consumers,
including the authority to bring enforcement actions. The CFPB has the ability to conduct
investigations, file administrative complaints, and hold hearings and adjudicate claims through the
CFPB’s administrative enforcement process. The CFPB has independent litigating authority and can
therefore file cases in federal court alleging violations of fair lending laws under the CFPB’s
jurisdiction. The CFPB will also refer findings of certain ECOA violations to the DOJ. The CFPB
coordinates closely not only with the DOJ, but also with other federal enforcement agencies and
state regulators, including the FTC, HUD, and state attorneys general, to ensure that fair lending
enforcement efforts are consistent, efficient, and effective.
17 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
The Offices of Fair Lending and Enforcement work closely and collaboratively on investigations that
may involve fair lending issues, in order to leverage the expertise of the respective offices toward the
goal of effective enforcement of fair lending laws. The CFPB’s Fair Lending and Enforcement offices
have a number of pending fair lending investigations, including matters arising from the CFPB’s
supervisory activity and joint investigations with other federal agencies. While the details of ongoing
investigations are confidential, the CFPB’s conclusions will typically be made public if an
enforcement action is filed at the conclusion of an investigation.
The Office of Fair Lending has developed and conducted training courses for enforcement attorneys
on fair lending issues as well.
2.3 Fair Lending Consumer Education and Engagement
Central to the CFPB’s work is consumer education and engagement. The Dodd-Frank Act
established the Office of Financial Education, which is vested with the responsibility of developing
and implementing initiatives intended to educate and empower consumers to make better financial
decisions.6 The Offices of Fair Lending and Financial Education work together to educate
consumers and promote awareness of federal fair lending laws, such as ECOA, with the goal of
helping consumers recognize prohibited practices and protect themselves from discriminatory acts.
For example, in a brochure released in May 2012, entitled “Credit Discrimination is Illegal,”
consumers are advised about ECOA’s protections, warning signs of discrimination, and how to
protect themselves by being active, engaged consumers. More information is available at
consumerfinance.gov/fair-lending/.
6 Dodd-Frank Act, § 1013(d)(1).
19 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
2.4 A Data-Driven Approach to Fair Lending – Collaboration with Research, Markets, and Regulations
The Division of Research, Markets, and Regulations brings together Ph.D. economists, financial
industry experts, and experienced attorneys to lead the CFPB’s efforts to articulate informed
perspectives about current issues in consumer financial markets. Each of these offices plays an
integral role in the CFPB’s mission of ensuring equal access to credit.
The Office of Research includes dedicated fair lending research staff who conduct empirical fair
lending analyses in connection with the CFPB’s supervisory and enforcement activities, as well as
special projects and initiatives. Together we have developed and continue to develop tools that allow
the CFPB to identify areas of heightened fair lending risk and promote efficiency in our supervisory
and enforcement efforts.
CFPB Director Richard Cordray and CFPB Deputy Director Raj Date take questions from the audience
at the field hearing on payday lending in Birmingham, AL.
The various Markets offices are organized by product area and are charged with providing guidance
on, and analysis of, specific consumer financial services markets. The offices also participate in the
20 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
development and analysis of consumer protection policy options in a variety of areas that are
relevant to fair lending and access to credit matters. These areas are Mortgage and Home Equity
Markets; Card and Payment Markets; Installment and Liquidity Lending Markets; and Deposits,
Collections, and Credit Information Markets. Information on market trends relating to fair lending
is then fed into other aspects of the CFPB’s work in fair lending. For example, the Office of Fair
Lending worked closely with the Office of Installment and Liquidity Lending Markets and the Office
of Research this year to respond to Congress’s request that the CFPB examine and report on a series
of questions related to private education loans and private educational lenders. A detailed
description of this study and our conclusion follows.
2.5 Dodd-Frank Act Report to Congress on Private Student Loans
On July 20, 2012, the CFPB and the Department of Education (DOE) submitted a report to
Congress on Private Student Loans (PSL),8
responding to the Dodd-Frank Act’s mandate that the
agencies discuss:
[T]he underwriting criteria used by private educational lenders, including the use of
cohort default rate (as such term is defined in section 435(m) of the Higher Education
Act of 1965);
[W]hether Federal regulators and the public have access to information sufficient to
provide them with assurances that private education loans are provided in accord
with the Nation’s fair lending laws and that allows public officials to determine lender
compliance with fair lending laws; and
[A]ny statutory or legislative recommendations necessary to improve consumer
protections for private education loan borrowers and to better enable Federal
8 Consumer Financial Protection Bureau and the Department of Education, Private Student Loans (2012), available
at http://files.consumerfinance.gov/f/201207_cfpb_Reports_Private-Student-Loans.pdf.
21 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
regulators and the public to ascertain private educational lender compliance with fair
lending laws.9
In addition to an in-depth discussion of the private student lending market, products, and
consumers, the report also considered fair lending compliance in the PSL market. In particular, the
report examined the eligibility, underwriting, and pricing criteria used by private educational
lenders, with a specific focus on the use of cohort default rate.
2.5.1 COHORT DEFAULT RATE
Cohort default rate (CDR) is a measure of the federal student loan repayment history of a particular
group or “cohort” of borrowers. The CDR is the percentage of each post-secondary school’s
borrowers entering repayment on federal student loans in a particular two-year period who default
prior to the end of that period.
CDR is one tool used for determining a school’s eligibility for federal student loan programs. The
DOE removes a school’s eligibility for these programs when the institution’s three most recent CDRs
are above 25%, or where the most recent CDR is greater than 40%. The DOE uses CDR as an
eligibility cutoff at these relatively high levels because CDR is intended to be used as a broad
measure to evaluate the risk to taxpayers of guaranteeing loans at a particular school. CDR was not
specifically intended to assist private lenders in eligibility, underwriting, and pricing decisions,10
particularly at much lower levels of default (e.g., under 8%). However, CDR has been used by
private student lenders as a proxy for a student’s likelihood of repaying debt.
2.5.2 USE OF CDR BY PRIVATE STUDENT LENDERS
The CFPB received information from nine of the largest private student lenders about how they use
CDR and other institution-based criteria to determine a student’s eligibility11
for their loan
9 See Dodd-Frank Act, § 1077.
10 See Ass’n of Accredited Cosmetology v. Alexander, 979 F.2d 859, 861 (D.C. Cir. 1992); see also S. Rep. No. 102–58
(1991).
11 The term “eligibility” refers to whether a lender accepts applications from a particular postsecondary school’s
students. In other words, if a lender set its eligibility cutoff at a CDR of 8%, then students from those schools with a
22 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
programs, as well as underwriting and pricing. We found that the primary use of CDR by the sample
lenders is to set school eligibility cutoffs; in fact, a majority reported relying almost exclusively on
CDR to set their school eligibility cutoffs,12
with eligibility cutoffs between 6% and 12%.13
A few
lenders also reported using CDR as part of, if not the primary consideration in, underwriting and
pricing decisions; however, most reported using traditional, individually-applied criteria, such as
minimum credit score, debt-to-income ratio, etc.
2.5.3 FAIR LENDING IMPLICATIONS OF CDR
The use of CDR at very low default levels is a fair lending concern because racial and ethnic minority
students are disproportionately concentrated in schools with higher CDRs.14
For instance, we found
that African American students attending public four-year institutions were almost four times more
likely than students generally to attend schools with a CDR above 8%.
Hispanic students attending private four-year institutions were over seven times more likely than
students generally to attend schools with a CDR above 8%.15,16
Accordingly, use of CDR to
rate at or below 8% would be eligible to be considered for a loan, whereas students from schools with a rate above 8%
could not receive a loan, regardless of any particular student’s creditworthiness (or that of his or her co-applicant).
12 Most lenders who provided data also reported reliance on other nominal criteria such as requiring that a school be
Title IV eligible, be located in the United States or Canada, and have had no sanctions imposed by the DOE related to
financial, administrative, or loan performance reasons. Some lenders reported that they except Historically Black
Colleges and Universities. Additionally, a few lenders reported setting eligibility cutoffs using CDR in conjunction
with other factors such as internal portfolio performance, while others have phased out this particular use of CDR and
replaced it with a school’s graduation rate (which we note may raise similar fair lending concerns).
13 We note that some lenders had substantially more generous cutoffs.
14 To analyze the relationship between CDR and schools’ racial and ethnic demographics we studied 2007, 2008, and
2009 Integrated Post-Secondary Educational System data on school characteristics and enrollment, including
statistics on race and ethnicity, with the DOE’s official CDRs from 2007, 2008, and 2009. Due to the two-year nature
of the statistic, 2007, 2008, and 2009 are the three most recent CDR datasets available as of the writing of the CFPB’s
July report.
15 We carried out a regression analysis with CDR as the dependent variable and various racial and ethnic demographic
categories as the explanatory variables. This analysis confirmed the results discussed above as it found that CDR was
positively correlated with the percentage of minority students enrolled at postsecondary schools.
23 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
determine loan eligibility, underwriting, and pricing may have a disparate impact on minority
students by reducing their access to credit and requiring those minority students who do meet the
lenders’ eligibility thresholds to pay higher rates than are otherwise available to similarly
creditworthy non-Hispanic White students at schools with lower CDRs.
16 We tested the 8% cutoff because it is the most common CDR cutoff used by the lenders who provided data, not
because it has any obvious intrinsic predictive value.
24 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
TABLE 1: AVERAGE RACIAL AND ETHNIC DEMOGRAPHICS ABOVE AND BELOW 8%, BY SCHOOL TYPE, 2008-2009 ACADEMIC YEAR
Demographic Distribution Below 8%
Male Female White Hispanic Black American
Indian Asian
% % % % % % %
All 44.0% 56.0% 60.5% 9.3% 10.0% 0.8% 6.6%
Public 4-Year 45.5% 54.5% 63.9% 8.7% 8.3% 0.8% 7.2%
Private Not-for-Profit-4-Year 42.6% 57.4% 60.6% 6.5% 8.8% 0.6% 6.0%
Private for-Profit-4-Year 39.0% 61.0% 46.5% 7.9% 20.8% 0.7% 3.9%
Public 2-Year 43.0% 57.0% 51.3% 15.4% 16.9% 1.3% 6.6%
Private Not-for-Profit-2-Year 28.3% 71.7% 63.8% 16.2% 10.9% 0.3% 3.3%
Private for-Profit-2-Year 37.6% 62.4% 47.3% 23.9% 15.0% 0.9% 4.1%
Public Less-than-2-Year 44.8% 55.2% 44.0% 33.3% 11.7% 4.3% 4.3%
Private Not-for-Profit, Less-than-2-Year 32.5% 67.5% 46.3% 22.5% 20.3% 0.5% 4.0%
Private for-Profit, Less-than-2-Year 20.1% 79.9% 40.8% 26.4% 19.2% 0.5% 3.4%
Demographic Distribution Above 8%
Male Female White Hispanic Black American
Indian Asian
% % % % % % %
All 41.2% 58.8% 49.4% 17.0% 16.7% 1.0% 4.7%
Public 4-Year 40.8% 59.2% 46.6% 17.7% 25.1% 1.4% 2.7%
Private Not-for-Profit-4-Year 39.9% 60.1% 33.9% 33.2% 23.9% 0.7% 1.2%
Private for-Profit-4-Year 35.2% 64.8% 33.4% 10.5% 23.3% 0.8% 2.4%
Public 2-Year 43.1% 56.9% 55.0% 15.6% 12.4% 1.0% 5.9%
Private Not-for-Profit-2-Year 37.6% 62.4% 41.5% 17.9% 22.3% 0.5% 4.8%
Private for-Profit-2-Year 36.1% 63.9% 37.7% 20.8% 24.2% 0.8% 3.2%
Public Less-than-2-Year 35.7% 64.3% 70.8% 5.1% 19.8% 1.0% 1.0%
Private Not-for-Profit, Less-than-2-Year 54.8% 45.2% 12.8% 58.9% 20.7% 0.3% 6.9%
Private for-Profit, Less-than-2-Year 28.0% 72.0% 30.2% 31.3% 26.4% 0.6% 2.6%
Source: IPEDS 2009 and PEPS. Data are reported for the 50 States, D.C., Puerto Rico, and the territories.
25 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
While we were mindful that our analysis used aggregate data – and we were therefore prevented
from drawing conclusions about any specific lender’s practice – we were able to generally conclude
that lenders’ consideration of CDR in either school eligibility or underwriting and pricing criteria
may reduce credit access and increase costs disproportionately for minority borrowers. Accordingly,
use of CDR may require further analysis by lenders to ensure compliance with fair lending laws.
Federal student loans are generally a better choice for consumers than PSL. However, the
availability of such loans is statutorily limited and they do not cover the full cost of attendance at
many schools. Accordingly, PSL can be an important consumer financial product and lenders that
offer the product must do so in accordance with the nation’s fair lending laws.
The CFPB will continue to work with federal partners, industry, and consumer advocates to explore
means through which fair lending risk in private student lending can be mitigated, given the unique
underwriting challenges presented.
2.6 Amending Fair Lending Regulations
The Dodd-Frank Act transferred rulemaking authority under ECOA and HMDA to the CFPB.17
The
CFPB published its restatements of ECOA’s implementing regulation, Regulation B, and HMDA’s
implementing regulation, Regulation C, in interim final rules in December 2011.18
Section 1071 of the Dodd-Frank Act amended ECOA to require financial institutions to collect and
report to the CFPB data on lending to small, minority-, and women-owned businesses in order to
“facilitate the enforcement of fair lending laws and enable communities, governmental entities, and
creditors to identify business and community development needs and opportunities of women-
owned, minority-owned, and small businesses.”19
The Dodd-Frank Act also directed the CFPB to
prescribe rules and guidance as necessary to carry out, enforce, and compile data pursuant to that
17 See Dodd-Frank Act, §§ 1002(12), (14), and 1022.
18 Equal Credit Opportunity (Regulation B), 76 Fed. Reg. 79,442 (Dec. 21, 2011) (codified at 12 C.F.R. pt. 1002); Home
Mortgage Disclosure Act (Regulation C), 76 Fed. Reg. 78,465 (Dec. 19, 2012) (codified at 12 C.F.R. pt. 1003).
19 Dodd-Frank Act, § 1071(a).
26 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
section. In April 2011, the CFPB issued guidance stating that the data collection and submission
obligations arising under these ECOA amendments do not arise until the CFPB issues implementing
regulations.20
The CFPB has begun the planning process to promulgate rules concerning small, minority-, and
women-owned business loan data collection and reporting. We are currently gathering information
from stakeholders to better understand the relevant business lending markets, and to determine
what data are available and how best to collect those data. The CFPB has also been in dialogue with
a number of interested governmental stakeholders about this issue, including the DOJ, the
Department of Commerce, the Department of Treasury, the Small Business Administration, and the
Board of Governors of the Federal Reserve System (FRB).
Section 1094 of the Dodd-Frank Act amends HMDA to require the collection and submission of
additional data fields related to mortgage loans, including certain applicant, loan, and property
characteristics, as well as “such other information as the Bureau may require.”21
The CFPB is
examining what changes it may propose to Regulation C. As required under the Dodd-Frank Act,
the CFPB will ensure the protection of mortgage applicants’ and mortgagors’ privacy interests in the
disclosure of any additional data fields to the public under HMDA.22
A discussion of the prescribed
amendments to Regulation C follows, in the HMDA Report section of this Report to Congress.
Finally, section 1403 of the Dodd-Frank Act requires that the CFPB prescribe regulations under
TILA to prohibit “abusive or unfair lending practices that promote disparities among consumers of
equal credit worthiness but of different race, ethnicity, gender or age.”23
The CFPB has begun
preliminary planning with regard to this rule.
20 Letter from Leonard Kennedy, CFPB General Counsel, to Chief Executive Officers of Financial Institutions under
Section 1071 of the Dodd-Frank Act (Apr. 11, 2011), available at http://files.consumerfinance.gov/f/2011/04/GC-
letter-re-1071.pdf.
21 Dodd-Frank Act, § 1094(3).
22 See Dodd-Frank Act, § 1022(C)(8).
23 Dodd-Frank Act, § 1403.
27 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
3. Reporting on the Equal Credit Opportunity Act and the Home Mortgage Disclosure Act
3.1 Reporting on the Equal Credit Opportunity Act
Prior to the passage of the Dodd-Frank Act, the FRB was required under ECOA to file an annual
report to Congress describing the administration of its functions under ECOA, an assessment of the
extent to which compliance with ECOA has been achieved, and a summary of enforcement actions
taken by other agencies with responsibilities under ECOA. On the CFPB’s designated transfer date
of July 21, 2011, the FRB’s responsibility for this report was transferred to the CFPB.24
This part of
the CFPB’s Fair Lending Report will provide the information required by ECOA: first, it will
describe the CFPB’s and other agencies’ enforcement efforts and assessment of the extent of
compliance with ECOA; then, it will summarize the outreach efforts of the various agencies charged
with responsibility under ECOA. This ECOA report will cover the period between July 21, 2011, and
December 31, 2011; future reports will encompass an entire calendar year.
24 See 15 U.S.C. § 1691f.
28 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
3.1.1 ECOA ENFORCEMENT
Several federal government agencies, including the CFPB, have administrative enforcement
authority under ECOA. ECOA makes it illegal for a creditor to discriminate in any aspect of a credit
transaction against any applicant on the basis of race, color, national origin, religion, sex, marital
status, age (so long as the applicant is old enough to enter into a binding contract), receipt of
income from any public assistance program, or exercising in good faith a right under the Consumer
Credit Protection Act.
As discussed in Part II, the CFPB is committed to ensuring that the institutions under its
jurisdiction comply with ECOA. The CFPB’s efforts related to ECOA, as prescribed by the Dodd-
Frank Act, and the enforcement efforts and compliance assessments made by all the agencies
assigned enforcement authority under section 704 of ECOA25
are discussed in this section.
3.1.2 PUBLIC ENFORCEMENT ACTIONS
In addition to the CFPB, the agencies charged with enforcement of ECOA under section 704
include: the FRB, the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller
of the Currency (OCC), and the National Credit Union Administration (NCUA) (collectively the
Federal Financial Institutions Examination Council agencies or FFIEC agencies);26
the FTC, the
Farm Credit Administration (FCA), the Department of Transportation (DOT), the Securities and
Exchange Commission (SEC), the Small Business Administration (SBA), and the Grain Inspection,
Packers and Stockyards Administration of the Department of Agriculture (GIPSA).27
During the
reporting period, from July 21, 2011 through December 31, 2011, the FDIC filed one public ECOA
25 15 U.S.C. § 1691c.
26 The FFIEC is a “formal interagency body empowered to prescribe uniform principles, standards, and report forms
for the federal examination of financial institutions” by the member agencies listed above and the State Liaison
Committee “and to make recommendations to promote uniformity in the supervision of financial institutions.” See
http://www.ffiec.gov/.
27 15 U.S.C. § 1691c.
29 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
enforcement action.28
3.1.3 VIOLATIONS CITED DURING ECOA EXAMINATIONS
Of the institutions examined, the FFIEC agencies reported that the most frequently cited Regulation
B violations were:
TABLE 2: MOST FREQUENTLY CITED REGULATION B VIOLATIONS BY FFIEC AGENCIES
FFIEC Agencies Reporting Regulation B Violations
CFPB, FRB, FDIC, OCC, NCUA
12 C.F.R. § 1002.4 – Discrimination on a prohibited basis in a credit transaction. 12 C.F.R. § 1002.5(b) – Improperly requesting information about race, color, religion, national origin, or sex. 12 C.F.R. § 1002.13(a) and (b) – Failure to collect information about applicants seeking credit primarily for the purchase or refinancing of a principal residence, including applicant race, ethnicity, sex, marital status, and age, for monitoring purposes. 12 C.F.R. § 1002.9 (a)(2) and (b)(2) – Failure to provide sufficient information, including specific reasons for adverse action, in adverse action notification. 12 C.F.R. § 1002.7(d)(1) – Improperly requiring a borrower to obtain the signature of a spouse or other person in order to be considered for credit approval.
28 Because the authorities under the Dodd-Frank Act transferred to the CFPB on July 21, 2011, this report’s reporting
period is July 21, 2011, through December 31, 2011. The FTC reported for the entire calendar year 2011 and reported a
public enforcement action in April 2011. This action is not reported here because it is outside of the time period of this
report. Similarly, the FRB reported that a referral made to the DOJ prior to the time period covered by this report, led
to a public enforcement action by the DOJ in December 2011. For more information about that action, please see
http://www.justice.gov/opa/pr/2011/December/11-ag-1694.html.
30 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
Of the remaining agencies, only the FCA conducted examinations and reported results. The
Regulation B violations most frequently cited by the FCA were:
TABLE 3: MOST FREQUENTLY CITED REGULATION B VIOLATIONS BY OTHER ECOA AGENCIES
The DOT, GIPSA, the SBA, and the SEC reported that they received no complaints based on ECOA
or Regulation B. The FTC is an enforcement agency and does not conduct compliance examinations.
3.1.4 REFERRALS TO THE DEPARTMENT OF JUSTICE
Three FFIEC agencies referred a total of 12 matters to the DOJ during the reporting period. These
matters alleged discriminatory treatment of persons in credit transactions due to race, national
origin, age, or marital status.
3.1.5 INTERAGENCY OUTREACH RELATED TO ECOA
The FFIEC agencies all report substantial outreach and interagency activity aimed at ensuring
creditors’ compliance with ECOA and Regulation B, and that fair lending laws are enforced in a
consistent and fair manner.
The CFPB, along with the DOJ, HUD, the FRB, and the National Association of Attorneys General
serves as co-chair of the Federal Financial Fraud Enforcement Task Force’s Non-Discrimination
Working Group, with Assistant Director Ficklin representing the CFPB. The Financial Fraud
Enforcement Task Force was established in November 2009 by an Executive Order to strengthen
the efforts of the DOJ in conjunction with federal, state, and local agencies “to investigate and
Other ECOA Agencies Regulation B Violations
FCA
12 C.F.R. § 1002.9 – Failure to provide timely adverse action notices, incomplete documentation to support the adverse action taken, or failing to give specific reasons for adverse actions taken. 12 C.F.R. § 1002.13(b) – Failure to complete voluntary monitoring forms when borrower chose not to provide requested information regarding ethnicity, race, and sex.
31 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
prosecute significant crimes and other violations relating to the . . . financial crisis and economic
recovery efforts, recover the proceeds of such financial crimes and violations, and ensure just and
effective punishment of those who perpetuate financial crimes and violations.”29
The Task Force
brings together representatives from law enforcement agencies, regulatory authorities, inspectors
general, and state attorneys general in order to combat financial fraud. This interaction fosters high
level discussions among relevant stakeholders about policies, procedures, rulemakings, and other
major initiatives. The Task Force’s Non-Discrimination Working Group in particular is dedicated to
improving efforts to detect and eliminate discrimination in the lending and financial markets.
The FRB took a lead role in the Working Group’s effort to analyze data on the Department of
Treasury’s Home Affordable Modification Program for evidence of potential discrimination by
participating servicers. The Working Group sponsored a field hearing in San Francisco in the fall of
2011, providing outreach to local housing organizations, community groups, and financial
institutions. In addition, on November 2, 2011, the FRB hosted an interagency webinar, Fair
Lending Issues and Hot Topics, along with the CFPB, the OCC, the DOJ, HUD, the NCUA, and the
FDIC. Over 6,000 registrants participated in the webinar, which included presentations on
redlining, fair lending exams, maternity leave discrimination, broker compensation, and unsecured
consumer loans.
The CFPB, HUD, the DOJ, the OCC, the FRB, the FDIC, the Federal Housing Finance Agency, the
NCUA, and the FTC participate in the Federal Interagency Task Force on Fair Lending to discuss
and coordinate fair lending activities. The Task Force meets bimonthly to share information and
views on emerging fair lending issues.
The CFPB also belongs to a working group of federal agencies – with the DOJ, HUD, and the FTC –
that regularly meets to discuss fair lending enforcement. These regular discussions are designed to
ensure that enforcement efforts are well-coordinated. Additionally, the CFPB is part of the FFIEC
Subcommittee on HMDA and the Community Reinvestment Act (CRA). The purpose of this
subcommittee is to encourage the discussion of issues pertaining to the collection and processing of
HMDA and CRA data, which financial institutions are legally obligated to report.
29 Exec. Order No. 13519, 74 Fed. Reg. 60,123 (Nov. 17, 2009).
32 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
In addition, several FFIEC agencies participated in meetings, conferences, and trainings throughout
the country. Outreach efforts included meetings with consumer advocates, civil rights groups,
supervised institutions, and industry representatives. The CFPB’s fair lending outreach is described
in detail later in this Report.
3.2 Reporting on the Home Mortgage Disclosure Act
The CFPB’s HMDA reporting requirement30
calls for the CFPB, in consultation with HUD, to report
annually on the utility of itemizing certain mortgage loan data.31
Like the reporting requirement
under ECOA, the HMDA reporting requirement was transferred from the FRB to the CFPB
pursuant to the Dodd-Frank Act. The CFPB’s reporting on HMDA, made in consultation with HUD,
is presented here.
Congress enacted HMDA in 1975 in response to Congressional findings indicating that some
depository institutions had at times contributed to the decline of certain geographic areas by failing
to provide adequate housing financing on reasonable terms and conditions. HMDA and its
implementing regulation, Regulation C, require the collection and reporting of loan-level mortgage
data by certain financial institutions, including banks, savings associations, credit unions, and other
mortgage lending institutions. The data include, for example, the total number and dollar volume of
mortgage applications and resulting mortgage loans and, for each application, the action taken by
the creditor; the location of the property to be mortgaged; the race, ethnicity, and gender of each
applicant; and the income relied on in the application.
Regulation C states three purposes of HMDA served by the collection and reporting of these data.
First, these data help in determining whether financial institutions are serving the housing finance
needs of their communities.32
These data are also relevant to reviewing certain institutions’
30 See 12 U.S.C. § 2807.
31 12 U.S.C. § 2803(b)(4).
32 12 C.F.R. § 1003.1(b)(1)(i).
33 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
obligations under the CRA. Second, the data can be used to assist public officials in the distribution
of public-sector investment, so as to attract private investment to areas that need it most.33
Third,
the mortgage loan data submitted under HMDA are used to assist in identifying possible
discriminatory lending patterns and enforcing antidiscrimination statutes,34
including ECOA and
the Fair Housing Act.35
The Dodd-Frank Act transferred HMDA rulemaking authority from the FRB to the CFPB36
and
expanded the scope of the data that must be collected and submitted under HMDA. Section 1094 of
the Dodd-Frank Act amended HMDA to require HMDA-reporting entities to collect and report a
number of new data elements, including elements related to additional loan, applicant, and
property characteristics, as well as to allow the CFPB to require the collection and reporting of “such
other information as the Bureau may require.”37
At present, the CFPB’s efforts to implement these
changes are in the pre-rule stage.
33 12 C.F.R. § 1003.1(b)(1)(ii).
34 12 C.F.R. § 1003.1(b)(1)(iii).
35 42 U.S.C. § 3601 et seq.
36 See Dodd-Frank Act, §§ 1061 and 1094.
37 Dodd-Frank Act, § 1094(3).
34 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
4. CFPB Outreach: Working with Private Industry, Fair Lending, Civil Rights, Consumer and Community Advocates
4.1 Private Industry Outreach
As one of its core functions, the Office of Fair Lending is responsible for “working with private
industry . . . on the promotion of fair lending compliance and education.”38
Consequently, the CFPB
regularly engages with representatives from private industry – including financial services
providers, fair lending compliance specialists, and regulatory attorneys – at conferences, meetings,
colloquia, and roundtables throughout the country. The CFPB seeks to engage stakeholders with an
interest in fair lending, with the understanding that there is much insight to be gained from varied
perspectives that represent many distinct points of view. In this spirit, the CFPB frequently meets
with private industry. These interactions have allowed the CFPB to learn about emerging fair
lending and regulatory issues, convey the CFPB’s regulatory compliance expectations, and promote
fair lending compliance and education pursuant to Congress’s direction.
38 Dodd-Frank Act., § 1013(c)(2)(C).
35 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
Since July 2011, the CFPB has participated in numerous formal events with a fair lending focus;
additional engagements with private industry are being planned. The CFPB has addressed trade
associations, several leading industry law firms, executives from leading consulting compliance
firms, and state banking associations as well as senior officials at banks and nonbanks subject to the
CFPB’s jurisdiction. In addition, Assistant Director Ficklin and senior fair lending staff regularly
answer questions from industry counsel, bank representatives, and fair lending specialists about
CFPB examinations, enforcement actions, and interagency coordination; similarly, staff attorneys in
the Office of Regulations regularly answer questions from the same stakeholders about the correct
interpretation of fair lending regulations and application to their business practices.
4.2 Outreach to Fair Lending, Civil Rights, Consumer and Community Advocates
As a civil rights-oriented office within the CFPB, the Office of Fair Lending works with “fair lending,
civil rights, [and] consumer and community advocates” to promote fair lending compliance and
education.39
These engagements take place throughout the country in government offices, places of
worship, community meeting spaces, at CFPB headquarters, and via teleconference or
videoconference. Consumer advocates communicate directly with the CFPB, and the CFPB learns
about emerging fair lending issues from these groups that have regular interactions with the
consumers they serve.
39 Dodd-Frank Act § 1013(c)(2)(C).
36 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
Office of Fair Lending and Equal Opportunity Assistant Director Patrice Alexander Ficklin, along with
other members of the CFPB’s leadership, speak at the National Community Reinvestment Coalition’s
annual conference.
During the past year, CFPB staff traveled throughout the country to meet with groups focused on
fair lending issues; since July 2011, Fair Lending staff members participated in several dozen such
events. The Office of Fair Lending regularly meets with civil rights organizations as well as
consumer and community advocates.
In April 2012, which the CFPB recognized as Fair Housing and Fair Lending Month, Director
Cordray delivered a keynote address announcing the CFPB’s release of a Compliance Bulletin
regarding fair lending, discussed in Part II. In support of this focus, the CFPB released an
informative brochure and blog post that empower consumers to protect themselves from credit
discrimination. This event exemplifies how the CFPB can raise awareness about fair lending
education and compliance simultaneously. The Compliance Bulletin provides guidance to regulated
entities and their affiliates in industry; the credit discrimination brochure and blog arm consumers
with knowledge to navigate the consumer marketplace in a more secure manner.
In addition, senior CFPB leadership participated in periodic “Outside the Beltway” events at cities
and communities across the country. These field hearings allow CFPB leadership to meet and
37 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
participate in roundtables and larger discussions with consumers, consumer advocates, community
groups, civil rights groups, and industry representatives. As part of this outreach, Assistant Director
Ficklin co-led a hearing panel at the payday lending field hearing held in January 2012 in
Birmingham, Alabama.
All of these events provide the CFPB and the Office of Fair Lending with the opportunity to reach
out in order to promote fair lending compliance and education, identify emerging issues and new
risks, and champion fair and equal access to credit.
38 FAIR LENDING REPORT OF THE CONSUMER FINANCIAL PROTECTION BUREAU, DECEMBER 2012
5. Fair Lending Look Ahead
In this inaugural Fair Lending Report, we have introduced some of the CFPB’s collaborative work in
fair lending, both within the CFPB’s various divisions and offices and across federal and state
agencies. We have also introduced the Office of Fair Lending and Equal Opportunity – its mission,
staff, and work. The CFPB’s work in the area of fair lending is a priority and has only just begun.
The CFPB will provide its Fair Lending Report annually. In future reports, we look forward to
updating Congress about the CFPB’s accomplishments in the areas of fair lending and equal access
to credit. We will provide an update on the CFPB’s work to supervise bank and nonbank financial
services institutions and the CFPB’s public fair lending enforcement actions, as well as activities and
accomplishments across various offices to further the CFPB’s fair lending mission. We will report on
ECOA compliance as assessed by the agencies charged with enforcing that statute as well as fulfill
the HMDA reporting requirement. Finally, we will describe our efforts to reach consumers and
industry to promote fair lending compliance and education. In doing so, we will strive to fulfill
Congress’s mandate that the CFPB work to “ensure the fair, equitable, and nondiscriminatory access
to credit for individuals and communities” across America.